The President’s Long-Awaited Infrastructure Proposal

Below is a summary of major provisions of the proposal, including the structure of proposed funding as well as policy, permitting and workforce development provisions. The structure of the program has been generally revealed over the last several months, so the official delivery today of this plan is not a big shock to Congress or stakeholders. The plan is, as expected, a devolutionary approach, reducing the Federal government’s historical role in infrastructure funding, putting greater burdens on States, local governments and the private sector for funding, increasing public-private partnerships, tolling opportunities and innovative finance arrangements. The action now turns to Congress, who will hold some hearings on this proposal and develop their own proposals, which are likely to look quite different. The main problem facing both the administration and Congress remains how to pay for any federal infrastructure investment without the ability to dig up a magic buried pot of gold. Prime Policy Group will provide expanded commentary on the proposal and the Congressional reaction later this week.

“REBUILDING INFRASTRUCTURE IN AMERICA”

FUNDING PROVISIONS

$200 billion in funding over 10 years, proposed to leverage a total of $1.5 trillion:

Lead Agencies: DOT, Army Corps and EPA; $100 billion would be divided amongst these three agencies but does not specify amounts; other agencies can petition these three to transfer funds

Details: competitive discretionary grant program; requires applicants to come to the feds with @80% of project funded with State, local or private sector funds; Federal government is a “completer” not a primary investor.

Details: Block grants 80% to Governors and Territories by formula for projects in areas with population less than 50,000; 20% for rural performance grants, a discretionary grant program open to States; set-aside for tribes for tribal transportation program at DOT and DOI; .

Transformative Projects

Funding: $20 billion

Eligibility: transportation, clean water, drinking water, energy, commercial space and broadband but not limited to these categories. For bold, exploratory and groundbreaking projects that significantly improve performance, safety, reliability, frequency and service speed; substantially reduce user costs for services; introduce new types of services and improve services based on other related metrics. Three tracks of investment: demonstration (up to 30% of eligible costs); project planning (up to 50% of eligible costs) and capital construction (up to 80% of eligible costs).

Lead Agency: Commerce with interagency selection committee of other agencies

RRIF – Railroad Rehabilitation and Improvement Financing – expanded to include short line freight and passenger rail

WIFIA – Water Infrastructure Finance and Innovation Act – expanded to include non-federal flood mitigation, navigation and water supply; remediation of water quality contamination at brownfield and superfund sites, and federal de-authorized water resources projects

Public Lands Infrastructure

Funding: From half of additional revenues from energy development on public lands to pay for capital and maintenance needs of public lands infrastructure up to $18 billion to create an Interior Maintenance Fund.

Lead Agency: Interior

Details: Discretion of Interior to use funds to address deferred maintenance and capital needs for infrastructure for national parks and wildlife refuges.

HIGHWAY TRUST FUND STABILIZATION

PAY-FORS

The proposal does not propose any revenue raisers for the $200 billion of Federal investment. The accompanying FY 19 budget document proposes cuts to domestic spending programs, including existing infrastructure programs such as Transit Capital Investment Grants and TIGER programs, to offset the proposed expenditure.

POLICY PROVISIONS

The proposal contains many provisions proposing policy changes to federal infrastructure development in surface transportation and aviation modes, water infrastructure programs, Superfund/brownfield reforms and flexibility to the Department of Veterans Affairs on use of real property and leases.